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(Alliance News) - Barclays on Thursday posted a record profit figure, hailing its Corporate & Investment Bank and an improving consumer backdrop.
The London-based lender reported pretax profit of GBP6.94 billion for the nine months to the end of September, a record figure and multiplied from just GBP2.42 billion a year ago. The third quarter alone brought pretax profit of GBP1.96 billion, up 71% from GBP1.15 billion a year before.
"On top of a good first half, a strong third quarter performance means Barclays has delivered its highest [third quarter year-to-date] pretax profit on record in 2021, demonstrating the benefits of our diversified business model," said Chief Executive Jes Staley.
Total income dipped slightly in the nine months, to GBP16.78 billion from GBP16.83 billion, but the bank's results were boosted by a GBP622 million credit impairment release, as opposed to being hit by a charge of GBP4.35 billion a year ago.
In the third quarter along, total income was GBP5.47 billion, up 5.0% from GBP5.20 billion a year before, though, within this, net interest income was down 5.6% to GBP1.94 billion from GBP2.06 billion. The third quarter had a credit impairment of GBP120 million, compared to a GBP707 million release in the second quarter and a GBP608 million impairment in the third quarter of 2020.
"The net release [in the nine months] included a reversal of GBP1.1 billion in non-default charges, primarily reflecting the improved macroeconomic outlook," the bank explained. It expects the impairment run rate to stay below historical levels in coming quarters.
Barclays reported a "strong" Corporate & Investment Bank performance, with Investment Banking fees and Equities income having their best third quarter year-to-date performance on a comparable basis. It also saw a recovery on the consumer side, with strong volumes in the UK for mortgage and deposit volumes.
"Against that backdrop, we are focused on balancing cost efficiencies with further investment into high-returning growth opportunities. Our CET1 ratio of 15.4% means we are also in a strong position to balance this growth with a key priority of returning excess capital to shareholders," said Staley.
Barclays shares down 1.0% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.4% at 7,192.40
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Hang Seng: down 0.9% at 25,908.85
Nikkei 225: closed down 1.9% at 28,708.58
DJIA: closed up 152.03 points, or 0.4%, at 35,609.34
S&P 500: closed up 16.56 points, or 0.4%, at 4,536.19
Nasdaq Composite: closed down 7.41 points at 15,121.68
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EUR: firm at USD1.1651 (USD1.1647)
GBP: down at USD1.3800 (USD1.3820)
USD: down at JPY113.97 (JPY114.24)
Gold: up at USD1,785.25 per ounce (USD1,783.82)
Oil (Brent): up at USD85.29 a barrel (USD85.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1600 CEST EU flash consumer confidence indicator
1100 BST UK CBI industrial trends survey
0830 EDT US jobless claims
1000 EDT US home sales
1030 EDT US EIA weekly natural gas storage report
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The UK government's interest payments bill on the huge debts built up during the Covid-19 pandemic hit GBP4.8 billion in September due to rising inflation, according to the Office for National Statistics. The latest figure is the same amount as September last year, despite borrowing levels in the month falling and tax receipts rising year on year. The ONS said this is due to the retail price index measure of inflation rising – which is linked to government interest payments – as the UK economy recovers. Overall, the ONS said borrowing hit GBP21.8 billion in September, down from GBP28.8 billion a year earlier. It added that last month's figure was the second highest September for borrowing since records began in 1993.
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Doctors have accused ministers of being "wilfully negligent" after UK Health Secretary Sajid Javid ruled out immediately implementing the UK government's coronavirus 'plan B'. Javid said people must get their Covid-19 vaccines and any booster shots, as well as doing things like wearing masks in crowded places as he repeated a warning that cases could reach 100,000 a day as the country enters a challenging winter period. But he said the government will not be implementing its 'plan B' strategy "at this point". England's autumn and winter coronavirus strategy includes 'plan B' as a contingency measure if the NHS comes under unsustainable pressure. That could include legally mandating face coverings in some settings, introducing mandatory vaccine-only Covid-status certification and asking people to work from home.
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BROKER RATING CHANGES
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JEFFERIES RAISES LEGAL & GENERAL TO 'BUY' ('HOLD') - TARGET 340 (290) PENCE
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COMPANIES - FTSE 100
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Consumer goods maker Unilever reported a slowdown in underlying sales growth but retained its full-year guidance. Third quarter underlying sales growth was 2.5% on a year ago, slowing from the 5.0% achieved in the second quarter. The year-to-date figure was 4.4%, moderating after first-half growth of 5.4%. Nonetheless, Unilever backed its full-year underlying growth guidance range of 3% to 5%. It also held margin guidance despite warning that cost inflation remains "at strongly elevated levels", and this is expected to continue into next year. "We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs," said Chief Executive Alan Jope.
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Pest control and hygiene firm Rentokil Initial reported third-quarter revenue of GBP761.9 million, up 0.5%, or 4.4% at constant exchange rates. Excluding the Disinfection business, which got a one-time pandemic boost last year, revenue was GBP750.8 million, up 9.7% or 14% at constant currency.
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Wealth manager St James's Place reported GBP148.06 billion in funds under management on September 30, up 25% from GBP118.70 billion a year before. Net inflows during the third quarter improved by 80% to GBP2.59 billion from GBP1.44 billion a year before. Gross inflows rose 42% to GBP4.32 billion from GBP3.05 billion. "Increased personal savings and improving consumer confidence have provided a favourable market backdrop and this, together with the great work our advisers do in supporting clients with their long-term financial planning, has driven gross inflows," said Chief Executive Andrew Croft.
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COMPANIES - FTSE 250
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Retail investment platform AJ Bell reported good growth in customers, net inflows and assets under administration over its recently ended financial year, even as it saw trends start to normalise following the lifting of lockdown restrictions. Total customer numbers for the financial year ended September 30 rose 30% to 382,754, with total net inflows up 52% to GBP6.4 million. Total assets under administration rose 29% to close at GBP72.8 billion. "Following the gradual easing of Covid restrictions over the course of the summer, we have seen retail trading activity return to more normal levels compared to the peaks seen earlier in the year. However, we are pleased that our key drivers of long-term growth, namely customer numbers and net inflows, have continued strongly," said Chief Executive Andy Bell. "In the final quarter of our financial year, net new platform customers increased by 16% and platform net inflows increased by 78% compared to the equivalent quarter in 2020."
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COMPANIES - MAIN MARKET AND AIM
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Just Eat Takeaway.com set out some long-term targets ahead of a Capital Markets Day on Thursday. The food delivery firm - recently ousted from the FTSE 100 for being too Dutch - reiterated guidance for 2021 - for gross transaction value to be in a range of EUR28 billion to EUR30 billion - and said it expects GTV to grow by "mid-teens percentage points" in 2022. In excess of EUR30 billion of GTV will be added over the next 5 years, it said. This year will be the peak for losses before the 2022 adjusted earnings before interest, tax, depreciation and amortisation margin improves to a range of minus 0.6% to minus 0.8% of GTV. Just Eat Takeaway said Thursday it is targeting a long-term margin in excess of 5% of GTV.
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COMPANIES - GLOBAL
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The collapse of China Evergrande's planned USD2.5 billion sale of a property services unit has left the troubled company closer than ever to its end, ramping up fears it will soon go under and send shockwaves through the Chinese economy. For months, speculation about the company's future has been swirling as a clampdown on the sprawling real estate sector by Beijing – aimed at curbing excessive borrowing – essentially cut it off from debt markets, unable to finish hundreds of building projects and unlikely to pay lenders. The end of talks to offload Evergrande Property Services marked the latest failure to sell assets to pay for a years-long buying spree that saw it snap up everything from a football club to a bottled water company and amusement parks. The sale of a USD1.5 billion stake in a regional Chinese bank in September represented a rare success. Evergrande's shares were down 13% in Hong Kong on Thursday.
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Thursday's Shareholder Meetings
Alumasc Group PLC - AGM
Dechra Pharmaceuticals PLC - AGM
Standard Life UK Smaller Cos Trust PLC - AGM
Time Finance PLC - AGM
VR Education Holdings PLC - EGM re name change to Engage XR
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
